PJT Partners Inc

NYSE:PJT

Earnings Call Transcript 2021-Q2

[Operator]

Good day, and welcome to the PJT Partners Second Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead, ma'am.

[Sharon Pearson, executive]

Thanks very much, Catherine. Good morning, and welcome to the PJT Partners second quarter 2021 earnings conference call. I'm Sharon Pearson, Head of Investor Relations at PJT Partners. And joining me today is Paul Taubman, our Chairman and Chief Executive Officer; and Helen Meates, our Chief Financial Officer.

Before I turn the call over to Paul, I want to point out that during the course of this conference call, we may make a number of forward-looking statements. These forward-looking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. We believe that these factors are described in the Risk Factors section contained in PJT Partners' 2020 Form 10-K, which is available on our website at pjtpartners.com. And I want to remind you that the company assumes no duty to update any forward-looking statements.

Also, the presentation we make today contains non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance. For detailed disclosures on these non-GAAP metrics and their GAAP reconciliations, you should also refer to the financial data contained within the press release we issued this morning, which is also available on our website. And with that, I'll turn the call over to Paul.

[Paul Taubman, executive]

Thank you, Sharon. Good morning, everyone, and thank you for joining us today. Today's economic environment has turned 180 degrees from that of a year ago. This time last year, most M&A activity was put on hold and advisory work centered around securing rescue capital and providing liability management and restructuring advice to companies severely impacted by the pandemic.

Since then, the combination of extraordinary fiscal and monetary stimulus, vaccine rollouts and reopenings, coupled with highly receptive capital markets, have helped propel an extraordinary global economic recovery. This has provided a dramatic catalyst to strategic activity, while also tamping down restructuring activity. Not surprisingly, the financial performance of our businesses mirrors that turn. As this robust recovery takes hold, our businesses away from restructuring have benefited. We are seeing significantly elevated levels of activity across our Strategic Advisory, capital advisory, shareholder advisory and fund placement businesses.

The gap created by the abrupt decline in restructuring activity is being filled by strong performance in our Strategic Advisory, PJT Park Hill and PJT CamberView businesses. Against this macroeconomic backdrop, we are pleased to report record second quarter results as measured by revenues, adjusted pretax income and adjusted earnings per share. Our year-to-date results are also at record levels.

Now turning to each of our businesses in more detail. Beginning with restructuring. We continue to believe that the fallout from COVID-19 will trigger an extended period of elevated restructuring activity. The pandemic has inflicted damage on many companies with business models disrupted and dislocated by changes in consumer behavior as well as accelerated technological innovation.

Nearly 1.5 years after the onset of this global health crisis, we continue to believe this longer-term restructuring outlook remains intact. This year, however, we are seeing less restructuring activity than we had previously anticipated. While we remain a market leader in restructurings globally, given today's extraordinarily benign credit conditions, our 2021 restructuring results are now unlikely to be much above 2019 levels. Notwithstanding these near-term headwinds, our restructuring business was up sequentially in the second quarter. Additionally, our restructuring business is poised for meaningfully stronger results in the second half of this year compared to the first half of the year, with most of that increase appearing in Q4.

Turning to PJT Park Hill. Many of the current economic conditions presenting challenges for restructuring are providing opportunities for PJT Park Hill. Strong demand for risk assets has stimulated fundraising activity in alternatives. This heightened demand, coupled with a roster of best-in-class fund managers, has been an important catalyst in PJT Park Hill's significant year-over-year revenue growth. PJT Park Hill's 6-month performance stands at record levels, and the business is well on track to deliver record results for full year 2021.

Turning to Strategic Advisory. In Strategic Advisory, we had our second best quarter ever, just slightly below Q2 2020's record results and up dramatically from Q2 2019. The momentum in our Strategic Advisory business continues to build as our mandate count has grown meaningfully from a quarter ago and stands at record levels.

Accordingly, we expect our Strategic Advisory results to increase significantly in the second half of the year, with most of that increase coming in the fourth quarter. For full year 2021, we expect our Strategic Advisory results to be up significantly as well.

Reviewing our capital priorities. Our approach to capital investment and capital return remains unchanged. The greatest return on investment continues to come from the people we attract to our platform. We continue to methodically add best-in-class talent as we build out our world-class Strategic Advisory franchise.

To that end, we have grown the number of professionals in Strategic Advisory by nearly 20% in the past year. Much of that additional investment has been directed towards Capital Markets Advisory, sponsor coverage and ESG as well as further deepening a number of existing industry verticals. We are also continuing to invest in our other businesses as we position ourselves for continued growth and market share expansion.

PJT remains the destination for best-in-class talent at all levels. As our summer programs draw to a close, I wanted to highlight the extraordinary success of our campus recruiting efforts. This year, we received more than 8,500 applications for just 81 summer positions.

Our summer class of analysts and associates were able to join us in person and will be engaging in 2 weeks of community service after concluding the in-office program. We have received extremely positive feedback from our interns, and it is clear that our unique culture of collaboration, integrity and excellence is broadly recognized.

Our second highest capital priority continues to be our efforts to offset the share issuance from this substantial and sustained human capital investment. Even after our significant recruitment of talented individuals at all levels, our fully diluted share count today is essentially unchanged from where it was at the end of 2016, excluding the vesting of earn-out units.

In the first 6 months of this year, we repurchased a record 2.3 million share equivalents. Our full year 2021 share repurchases, whether measured in dollars or shares are tracking at record levels. At current share prices, we continue to see compelling value in our shares.

Our success, these past 6 years, has resulted in a significantly larger and more profitable firm. As a result, we are now able to return additional capital to shareholders as well as continuing to aggressively invest in our business and continuing to offset the growth in share count. As it pertains to additional capital returns, Helen will discuss in greater detail the Board's decision to approve a special dividend of $3 per share.

Now over to Helen.

[Helen Meates, executive]

Thank you, Paul. Good morning. Beginning with revenues. Total revenues for the quarter were $241 million, up 3% year-over-year, with advisory revenues of $198 million, up 3% year-over-year and placement revenues of $40 million, up 14%.

For the 6 months ended June 30, total revenues were $447 million, up 3% year-over-year, with advisory revenues of $350 million, flat year-over-year, and placement revenues of $91 million, up 22%. The increase in advisory revenues for both the 3 month and 6-month periods was driven by increases in both Strategic Advisory and Secondary Advisory, which more than offset a decline in restructuring revenues. The increase in placement revenues for both the 3 months and 6-month periods was driven by significantly higher fund placement revenues, partially offset by a decline in corporate placement revenues.

Turning to expenses. Consistent with prior quarters, we presented the expenses with certain non-GAAP adjustments. These adjustments are more fully described in our 8-K. Adjusted compensation expense continues to be accrued at 62.5%. This ratio represents our current best estimate for the compensation ratio for the full year.

Turning to adjusted non-compensation expense. Total adjusted non-compensation expense was $32 million for the second quarter and $60 million for the first 6 months. As we mentioned last quarter, we expect the growth in our full year non-compensation expense to be driven by increased senior advisor expense as well as continued investment in communications and IT and higher recruiting costs. These factors were the primary driver of the higher non-comp expense in both the second quarter and the 6-month period. While we saw some resumption of travel in the second quarter, business-related travel activity continues to track well below historical pre-COVID levels. Looking ahead, we expect the full year 2021 non-compensation expense to be around the same level as our 2019 full year non-compensation expense.

Turning to adjusted pretax income. We reported adjusted pretax income of $58 million for the second quarter and $107 million for the first 6 months, with an adjusted pretax margin of 24.1% for the second quarter compared with 23.7% for the same period last year and 24% for the first 6 months compared with 21.9% for the same period last year.

Provision for taxes. As with prior quarters, we have presented our results as if all Partnership Units had been converted to shares, and that all of our income was taxed at a corporate tax rate. We also annualize the tax benefit relating to the delivery of vested shares during the first quarter. Our effective tax rate for the first half of 2021 was 22.8%. We expect our effective tax rate in the second half of the year to also be 22.8%.

Earnings per share. Our adjusted if-converted earnings were $1.06 per share for the second quarter and $1.95 per share for the first 6 months. On the share count, for the quarter, our weighted average share count was 42.1 million. During the second quarter, we repurchased the equivalent of approximately 715,000 shares, primarily through open market repurchases.

Our repurchases in the first 6 months, as Paul said, totaled approximately 2.3 million, including the exchange of approximately 900,000 Partnership Units for cash. We're currently in receipt of exchange notices for an additional 394,000 Partnership Units. And as we've done in the past, we will exchange these units for cash.

On the balance sheet, we ended the quarter with $212 million in cash, cash equivalents and short-term investments and $294 million in net working capital, and we have no funded debt outstanding.

As we announced this morning, in addition to a quarterly dividend of $0.05 per share, the Board has approved the payment of a special dividend of $3 per share to all shareholders of Class A common stock. This special dividend is payable on October 18, 2021, to shareholders of record as of October 4.

Given our partnership structure, we make tax distributions to our limited partners. And to-date, these distributions have consistently been equal to 50% of taxable income, which is the minimum required under our partnership agreement. The distributions are paid to all limited partner unitholders, including the public company, which holds approximately 61% of the units.

As our taxable income has grown, so too have the tax distributions, which, in turn, has resulted in an excess cash build at the public company. This cash build began in the second half of last year and is continuing. And in light of the excess cash build at the public company, the Board has authorized the $3 special dividend to public shareholders.

And with that, I'll turn it back to Paul.

[Paul Taubman, executive]

Thank you, Helen. In terms of our outlook. On a sequential basis, we expect the momentum in our businesses to continue to build in the second half of the year, with most of the incremental growth occurring in the fourth quarter. Viewed on a year-over-year basis, our third quarter comparisons are the most difficult as they reflect our highest restructuring quarter ever. However, we have considerable momentum and are positioned to finish the year quite strongly.

There is no doubt that we will begin 2022 with a demonstrably stronger and more formidable firm than when we began this year. Despite the 2021 headwinds in restructuring, our other businesses are all on track for record performance in 2021. And all of our businesses, including restructuring, are well positioned heading into 2022 and beyond. We remain extremely confident in our future growth prospects.

And with that, we will now take your questions.

[Operator]

[Operator Instructions] We'll now take the first question from Devin Ryan, JMP Securities.

[Devin Ryan, analyst]

Maybe just to start off somewhat nuanced, but just trying to think about some of the commentary today versus 3 months ago. Clearly, restructuring is maybe a bit more muted, which makes sense just given what we're seeing in the environment. But I'd love to just get kind of the bigger picture, is the Strategic Advisory, has that environment gotten better relative to kind of what you guys were seeing a few months ago? And then also, just kind of curious, as we look out maybe a bit further on the Strategic Advisory side, getting some questions around the executive order from the Biden Administration, any expected impact on business as a result of that as well.

[Paul Taubman, executive]

Well, as always, there's a lot in that question, so let me try and unpack it. With respect to restructuring, we have been consistent, which is business models have been disrupted. There is enormous shift in consumer behaviors. There are an enormous number of new companies that have risen to capitalize on these dislocations. And just as there are winners, there are going to be losers. And that is independent of the macroeconomic environment.

You're going to have more disruption, more changing of the pieces on the chessboard. You're going to have lots of new entrants, companies we didn't hear of 5 or 10 years ago with extraordinary market capitalizations. That joy has to create pain somewhere in the system.

And there's a lot of idiosyncratic restructuring, which is all knit together through a common bond of digital disruption, changes, a reset driven by COVID. And even if the financing markets are incredibly vibrant and robust and companies can find rescue capital and they can kick that can down the road, that doesn't stop the essential fact that many of these companies are vulnerable and their business models have been compromised. And we are very much of the belief that over time, those companies will have their day of reckoning, and there is going to be a very active restructuring environment. And when that happens, the quantum of debt that is outstanding, it makes anything in previous cycles, look quite modest. So there's that.

With respect to the here and now, when you had near 0 interest rates and you have vulnerable companies that are able to refinance for mid-single-digit rates. It has taken companies that might otherwise have needed to restructure and given them another lease on life, which is why our 2021 view has become less constructive. But from our perspective, we think we, as a firm, are taking that pain in 2021, and therefore, we don't see a carryover or a hangover into 2022. So that's sort of my best effort to address your restructuring questions.

With respect to M&A, I think we were early in saying there is a secular change, and you're going to see more M&A in this cycle and in most any cycle than we would have seen previously because that is the companion to this digital disruption and innovation, which is as the world speeds up, companies need to react.

Now there's all of this talk about are we in sustainable M&A volumes? Can we keep this up, et cetera. And I could go on with lots of different facts. But I'm just going to give you one snapshot here, which I think sort of puts all of this into perspective.

One of the challenges when we report or when others report is it's compared to a year ago, which were anything but ordinary times. And depending upon whether you were on top or on bottom a year ago, your growth rates are going to look very different. But if we look at the M&A market and look at the first half of 2021 and just simply annualize it, and if we compare it to 2018, the M&A volumes are up 43%. The annualized '21 versus '18 is up 43%. And if you back out SPACs, it's up 25%.

During that period of time, the S&P is up 58%. And the number of deals, depending upon whether you include or exclude SPACs, is up anywhere from 3% to 5%. So all of this tracking a year ago, when you're comparing it to a market that was just flat on its back, doesn't really resonate with me. Right?

So when you look at this in a longer perspective, I continue to believe that there is a secular shift, and I don't think that the volumes today are reflective of anything aberrational. The real issue, which no one is talking about is the fact that equity values are up 60% since 2018. So if you believe that, that's where the vulnerability is, then of course, we're going to have issues.

And as it relates to the Biden Administration, every administration has different policies and alike. I maintain, and I talked about this for a while that the mega deals, which are the deals which are most likely to receive heightened regulatory scrutiny. We had seen a meaningful reduction in true mega deals for the last few years because of all of the difficulties in navigating the regulatory regimes around the globe. And with COVID and some additional nationalism and rise of national champions, we think that's going to be more difficult.

But to some extent, Devin, you've seen a self-editing there. In that the number of super large transactions that get brought to the market has declined in the last few years. So it's not clear to me whether executives have already factored this in, in which case the Biden Administration really is just codifying or attempting to enforce what's already common wisdom or whether it will have some effect. But if it has effect, I don't think it will have a significant effect, because it does relate to a relatively small number of situations.

[Devin Ryan, analyst]

Maybe just a follow-up on the potential for margin expansion from here. So clearly, I think as you guys were embarking on the journey, the view was, could get where peers are on margins as the business scales and some of that growth investment moderates on a relative basis over time and potentially even -- given your structure get to a level that is above some of the peers or on the higher end of the band.

Where you're operating now in kind of the mid-20s on an adjusted margin basis, which I think was kind of the level that many viewed as good in the market. And what we're seeing is some of the peers are now moving to 30% or even a little bit above that. So I'm curious -- in a very good backdrop. But I'm curious how you guys are thinking about the potential to continue to move margins higher from, call it, this mid-20% level and even in a better environment, get to something that's closer to 30% or above.

[Paul Taubman, executive]

Well, first of all, I'm not sure that margin calculations off of 2 quarters of operating performance in a world that is anything but normal, has any sense of what is the new normal for margins. Just to start there, right? I'm not convinced that 2 quarters of results in what are clearly atypical cost environment because of the lack of travel and a lack of in-office is really reflective. So let's see what it becomes over time. That would be number one. So I just don't know, but I'm not convinced that there is a new normal.

Number two, we've always said that we are going to make sure that investment comes first as opposed to flattering margins. And if you go through Helen's commentary you will see that we have spent a lot of money on IT systems because in a world that is going to be more hybrid, you need to be cutting edge. We have spent a lot of money. We will continue to spend a lot of money. You'll also see in our margins that we have made greater use of senior advisers around the globe who have been extraordinarily additive to our franchise, and there's that cost, and the recruiting costs, which reflect the fact that we've grown our Strategic Advisory headcount 20% in the last 12 months, which I think is second to none.

So a lot of that will ultimately work its way through the system, and then we'll see what the margins are, but I maintain that, if anything, because of the way we've architected our firm, we have a long-term cost advantage. And a lot of the margin too is just reflective of where you are in the revenue cycle. And as we continue to grow our revenues, which we undoubtedly will, you'll see more operating leverage in the business.

And then not to turn this into a trite, but you did ask an open-ended question. The other thing you need to look at too, is whenever you're doing a study, you need to look at when other companies have the similar revenues, what are their margins? Because there's no doubt, if we had $2 billion in revenues, we'd have higher margins. So question is, at these levels, who has the most effective cost structures. And I stand by what I've said from day one. I think we're building a better mousetrap.

[Devin Ryan, analyst]

I was looking for some of the relative color there, not saying that we're necessarily setting a new bar here permanently.

[Paul Taubman, executive]

Absolutely. Thank you, Devin.

[Operator]

We'll now take the next question from Richard Ramsden at Goldman Sachs.

[Richard Ramsden, analyst]

So maybe I can kick off with a couple of questions. So the first is, can you expand a little bit on what you're seeing in the advisory business? And I guess, based on the public data what we've seen is that financial sponsor activity has picked up a lot in the last 3 or 4 months. So I'm curious, does that reconcile with what you're seeing within your business in terms of pipelines? And then more broadly, this cycle has obviously been dominated by a pickup in activity in the U.S. Based on your dialogues, are you seeing green shoots in terms of activity in the rest of the world? Or is that still quite muted?

[Paul Taubman, executive]

We're seeing green shoots everywhere. I do think that the U.S. is clearly leading in so many ways. I think it's led in vaccination rollouts. It's led in economic recovery. It's led in fiscal and monetary stimulus. And not surprisingly, it's led in M&A activity. And I suspect that Europe and the rest of the world will, if not catch up, they'll get more into gear. But there's no doubt that there's a lot of activity that is beginning to percolate everywhere, and it's not just contained to the U.S.

With respect to sponsors, it's, again, how you look at this. Sponsors as buyers, if you actually look at the data. Sponsors as buyers are pretty much up the same amount as corporates are up as buyers. So this whole notion of dry powder and all of that. The fact is, if you actually dig into the numbers that the buying is coming across the board. It's not corporate stroke strategic, it's not sponsors, it's everyone, and the buying is up almost across the board.

Now at the same time, you have a lot of capital put out by sponsors, and they are becoming an ever-increasing component of the sell-side as they monetize their investments. So I would say that, undoubtedly, we're seeing. And as they raise larger and larger funds, and as the M&A market grows and as they're growing along with that, it just means that they are going to be on both sides of the trade, both buying and selling. And there's no doubt that they are a bigger piece of this. But I see a lot of that coming from the fact that they have enormous amount of capital that's been committed and it's now being harvested, as you've seen there's explosion in values, and there's an opportunity.

And I think that also relates to the whole issue of whether you're going to continue to see sponsor to sponsor monetizations or whether you're going to see increasingly continuation funds, you're going to see special purpose vehicles to take assets that are true jewels and give individual LPs opportunities to create liquidity, while keeping those dual assets as a core holding for the sponsors. So this market continues to evolve and we're benefiting from that because a lot of that dialogue is at the intersection of our Strategic Advisory and Park Hill businesses.

[Richard Ramsden, analyst]

And then the second question I wanted to ask is around the decision to pay the $3 special dividend. And I guess, a couple of things. I mean the first is, by definition, special dividends, I guess, is supposed to be one-off, but at a number of your peers that become recurring nonrecurring items. How should we think about your appetite in terms of using special dividends as a capital return tool over a multiyear period?

[Paul Taubman, executive]

Well, I think we like to think and do things our own way. So I'm not sure we're going to be particularly influenced by others. The fact is, we have been laser-focused on 2 priorities: investing in the business and then to the extent there was capital left over to offset the dilution created by the investment, and that's been it. But as we become more and more profitable, we've opened up a third leg.

It's just -- it's the fact that we are a demonstrably different firm today, Richard, than we were 6 years ago, there is all of this excess cash that sits up there. This is an effort to sort of wipe the slate clean. And then at some point in the future, sometime I imagine in 2022, we'll probably take a first look at what our ongoing dividend policy should be. And having not touched it for 6 years, we'll, I'm sure, look at it sometime in 2022. But one thing about us, we're remarkably consistent, and we're not going to let that, in any way, compromise objective number one, which is to invest in the business and then to follow that by offsetting dilution. But if we end up generating additional moneys, then we'll open up a third leg.

[Operator]

We'll now take the next question from Steven Chubak at Wolfe Research.

[Brendan O'Brien;Wolfe Research, LLC;Research Associate, analyst]

This is Brendan O'Brien filling in for Steven. First on SPACs, you've had a lot of success winning business so far this year. And while the deals you've been on have clearly been of higher quality, there's been some concern around the ability of SPACs to find targets, given the significant amount of capital chasing deals. Paul, I was hoping you could provide your thoughts on the sustainability of the SPAC market overall and the ability -- their ability to find targets? And do you expect SPACs will continue to be a meaningful contributor to PJT's business into 2022?

[Paul Taubman, executive]

I've maintained that without trying to offend anyone, the bar to get a SPAC raised has been reasonably low. The bar to convince a target to engage with you, reasonably high. So the easy part, to some extent, is to go raise a SPAC and the harder part is to actually prevail. So it doesn't surprise me at all that there's a mismatch between the number of SPACs that have been raised and the number of SPACs that at the end of the day are going to be able to constructively put that capital to work.

You made the point and we would agree that we have been extraordinarily diligent in high grading those parties that we deal with. And when you're dealing with clear leaders in finance and in industry, you're going to find it easier to raise the pipe capital, and you're going to have a value-added proposition to the target and your batting average is going to be a lot higher. So that has been our objective. And since, we're highly selective in who we work with, I don't really see that as being a challenge in the near to intermediate term.

And I think that the SPAC market very much plays to our strengths because companies are coming to us because they want our imprimatur. They want our strategic deal flow. They want our advice. And we have a leading capital markets advisory practice. And when it all gets knit together, it's a compelling value proposition, and this is an important part of our practice and I expect it to remain an important part of our practice.

But I've also said, Brendan, that right now, there are many advantages that a SPAC has, one of which is regulatory arbitrage. And one of 2 things is going to happen. Which is some of the benefits to a SPAC are going to be tightened up or there's going to be more of a leveling of the playing field and some of the rules may be relaxed for regular way IPOS. But this is not sustainable permanently to have this difference. And over time, I suspect that the benefits from a regulatory perspective will be arbitraged away. But it will continue to be a different tool, which will have clear utility in certain circumstances, but it's never going to be the clear, dominant way for companies to go public, but it will be, for many companies, a better way. But I doubt it will ever be, or if it will be, not for very long, the only way or the principal way that companies go public.

[Brendan O'Brien;Wolfe Research, LLC;Research Associate, analyst]

On recruiting, there's been a lot of discussion about the hot labor market and the intense competition for both junior and senior talent, while elevated levels of activity likely make it even more difficult to attract or recruit talent. How have your conversations with potential recruits evolved throughout the year? And how do you compare your current recruiting pipeline with that at the start of the year?

[Paul Taubman, executive]

I think directionally, it's unchanged. Clearly, as we -- as the COVID fog lifts a bit, it makes probably more of these discussions actionable. As I mentioned on previous calls, when you're really in the midst of a crisis, most people want to sail close to shore, and they end up staying at their incumbent firm. And I think individuals are starting to say, okay, let me return to these important career decisions.

But I would highlight the fact that we've grown our Strategic Advisory headcount nearly 20% in the last 12 months. If you look at the composition of that, it is skewed towards senior professionals, meaning vice presidents all the way up through partners. So its officers plus, is up meaningfully more than 20%. And we are doing that in large part because all of the partners who we've hired as they are on the platform for longer periods of time, become increasingly productive, and they then create their own additional opportunities and workloads. So we've been super focused on that.

I mentioned our campus recruiting. I still -- I'm stunned every time I see that there are more than 8,500 campus applicants who want to work here. We were one of the extraordinarily few programs anywhere to conduct in-office this summer. I'm confident that, that gives us a huge leg up on all of our competitors because the experience and the engagement is just light years different. And there's no doubt that everyone has figured out that they need to engage and they need to focus on their individuals. But we've been doing that for 6 years.

We've built an extraordinarily differentiated culture, and you can't recreate that with a Peloton bike. So I feel like we're in a really good place, and we're going to continue to make sure that all of our employees get all of the career development, all of the mentoring and that if we can continue to do that and we can continue to polish a world-class culture that at the end of the day is going to be the single biggest recruiting advantage that we have. And it's hard for someone to replicate that over overnight. So we're very focused on that. But there's no doubt that activity levels are high. People are working extraordinarily hard, and everyone wants to add to their headcount.

[Operator]

We'll now take the final question of today from Michael Brown at KBW Securities.

[Michael Brown, analyst]

So I just wanted to follow up on the capital and capital return question here. I guess the one lever I didn't really hear about is acquisitions for PJT. CamberView was a nice acquisition when that was completed, and you guys obviously added a really attractive capability to the platform. Given your size and growth, now it's maybe a little less -- maybe there's a few less opportunities out there relative to a couple of years ago. But is M&A still an option for PJT? Is that something you would consider?

[Paul Taubman, executive]

Yes, we would consider it. I guess it would fall under the first, which is investing in our business. So if there's an opportunity to strengthen our firm by investing in the business, whether it's organically or inorganically, that is our first priority. Having said that, I've always maintained that you need to have an extraordinarily tight filter to find inorganic opportunities where there's cultural fit and it meshes from a strategy perspective and the like, CamberView was one of those. To the extent that there are others that are out there, we're certainly open to it. But I'm of the view that those are true diamonds in the rough and they come along extraordinarily and frequently.

[Michael Brown, analyst]

Just a quick follow-up there, Paul, is there anything that you, I mean, identified today as an area that has something that would be -- that could be filled through an acquisition? Obviously, much of your white space can be probably best addressed through hiring, but is there anything out there that you can identify or point to that, you'd say this would be maybe best met with an acquisition?

[Paul Taubman, executive]

I think anything -- well, let me start this way. We have extraordinary amount of white space. We're going to continue to organically grow the franchise, and there are just so many opportunities, whether you look at it in terms of industry verticals, capabilities, geographies, extraordinary opportunities for us to continue to grow. I'm absolutely confident that we can do all of that organically. But if it turns out that under further review, there's an inorganic way to get there in a better way. We're open to it, but there's nothing that I can see that we cannot get at organically.

[Michael Brown, analyst]

And then maybe just one more for me, just a clarification, kind of modeling related. We saw that there was some sizable completions really early in the third quarter. And so the third quarter is off to a nice start. But I just wanted to check due to the revenue recognition, accounting rules, was any of that recognized in 2Q that we should be aware of?

[Helen Meates, executive]

Yes. So we did have a number of deals that closed on July 1. They total approximately $20 million, and they did meet the accounting criteria such that we were required to book them in Q2. And then just for context, in Q1, we had a number of deals that closed on April 1, and they totaled about $9 million. So just to give you the other side of that.

[Operator]

That concludes today's questions-and-answer session. Mr. Taubman, at this time, I'd like to turn the conference back to you for any additional or closing remarks.

[Paul Taubman, executive]

Well, thank you very much. I just want to thank everyone for dialing in this morning and for their interest in our story and for their support of our company, and we look forward to speaking to you again on our next earnings call in the fall. Thank you.

[Operator]

That concludes today's call. Thank you for your participation. You may now disconnect.